Saudi Arabia’s inflation rate reached 2.3% in March, marking a 20-month high, according to the General Authority for Statistics. While this increase is modest compared to global standards, it reflects rising pressures on the cost of living.
The main contributor to inflation remains housing costs, but other factors are becoming more significant. A weaker dollar, to which the riyal is pegged, and higher global food prices are both pushing prices upward. Sectors such as hospitality and education are also adding to the overall increase.
Food prices, which often rise after Ramadan, saw a notable jump in March. Economic experts warn that ongoing global trends, such as the US-China trade conflict, could continue to drive food costs higher throughout the region.
Forecasts suggest that inflation may remain elevated in Saudi Arabia into 2025, though it is expected to stay well below the rates seen in neighboring countries. While housing pressures may ease, the overall inflation rate is predicted to hover between 2% and 2.5% in the near term before potentially dropping to around 1% by 2026, as non-food costs stabilize.
Saudi Arabia is also facing higher external costs after recording a current account deficit for the first time since 2020. As oil prices fluctuate, this deficit is expected to widen further over the next two years.
In summary, while inflation in Saudi Arabia remains relatively low, rising housing and food costs—combined with global economic factors—are creating new challenges for consumers and policymakers.